The Washburn Lofts building was once an abandoned relic of the milling era, but today it is one of the most coveted condo buildings in the Minneapolis. With terra-cotta relief carvings and a massive water tower, the 10-story building towers over the vibrant Mill District along the Mississippi River. Barry Berg of Coldwell Banker Burnet has the most expensive listing. It’s a 3,200-square-foot one-bedroom unit that’s listed at $2.7 million and Jimmy Fogel, also of Coldwell Banker Burnet, has the least expensive listing. It’s a 2,750-square-foot two-bedroom unit that’s listed for $1.495 million. And after seven days on the market, Cindy Froid of Keller Williams Integrity Realty found a buyer for her listing: a 3,625-square-foot, three-bedroom unit with wall panels that slide and pivot to adjust for privacy. The list price was $2.449 million; the sale is pending.
Jim Buchta • 612-673-7376
Glen Stubbe, Star Tribune Holly Holt showed a third-floor condo on Friday to Karen Elshazly of Orono. The Zenith Condominium, on S. 2nd Street near the Guthrie Theater, overlooks the Mississippi River and Gold Medal Park. Holt said that a recent price cut on units at the Zenith has generated more interest.
October 10, 2010
One frigid November for home sales
JIM BUCHTA, Star Tribune
Luanne Lind is optimistic that, come spring, home buyers finally will get the hint that these are the best buying conditions in decades. But for now the Eden Prairie-based Remax Results agent says the market was nothing but challenging.
And numbers released Friday by the Minneapolis Area Association of Realtors confirm that assessment. Existing home sales dropped 39.1 percent in November compared with last year and dipped almost 4 percent from October. There was one bright spot — the market did slightly better last month than it did two years ago; closed sales during November were up 1.8 percent from 2008.
It’s not unusual for the November chill and holiday hubbub to put a damper on the late-winter housing market. Buyers are busy being festive, and house shopping isn’t as much fun when it’s cold. At the same time, sellers don’t want to be bothered by buyers, and many think it’s best to wait for the spring thaw. The situation is even more complicated this year. Credit is still tight. Economic uncertainty lingers. And buyers and sellers alike await signs that the market has turned.
That’s unlikely in the short term. On a seasonally adjusted basis, the sales pace in November stood at 35,200, down almost 40 percent from last year but up 13 percent from October.
Lind said there was little to motivate buyers. Though mortgage interest rates have risen in recent weeks, they’re still below 5 percent. And there are plenty of options for buyers. During November there were 24,620 listings on the market, 12.1 percent ahead of last year, but 11.2 percent behind 2008.
Many traditional sellers are waiting for better weather and a better market. Banks aren’t. Distress sales, including foreclosures and short sales, continue to flow into the market, putting downward pressure on prices. Due in part to those nontraditional listings, the number of new listings that hit the market during November was 3 percent higher than it was last year, but almost 5 percent lower than 2008.
And so far this year the number of new listings lags behind last year by almost 2 percent — a sign that sellers are waiting in the wings.
Lind said that she’s advising her clients not to wait to buy or sell. For buyers, waiting could mean competing with an increase in buyers in the spring. And for sellers it means more competition from other listings. She offered that same advice to Heather Cripps, who closed on the sale of her Bloomington house last month. She bought the house four years ago, but got married, was laid off from her job and knew that the house would have to go. Losing $52,000 was painful, but now that prices have fallen even further since she listed it earlier this year, she’s grateful that she heeded her agent’s advice and cut her losses.
“I was told, and I believe, that it isn’t going to get any better,” she said.
Condo activity grows
Holly Holt, a sales agent with Keller Williams Integrity Lakes who specializes in downtown condos, is seeing some positive signs. November was a particularly busy month for her. While traffic at open houses she’s hosted has been slow, the buyers who come through have been serious, Holt said. She’s working with several whom she met at those open houses who are intent on buying.
“Traffic at open houses used to be crazy,” Holt said. “But I think people were checking out the novelty of downtown living and thinking about it as a long-term goal. But now people are ready.”
At a recent open house, where she’s listed a 2,100-square-foot condo in the Zenith building for $649,900, she met a woman who listed her suburban house in 2008 and couldn’t sell it so took it off the market. Now she’s realizing that condo prices have come down, as well, and is ready to make the move.
Last month the median sale prices of closed transactions in the metro area fell 2.5 percent to $165,700 from November 2009. A slight uptick in sales of upper-bracket houses helped offset declines in sale prices on many bank-owned listings and other distress sales.
Holt, who said that a recent price cut on the Zenith condo has generated more interest, said her experience tells her that there’s lots of pent-up demand.
“I think some people are just tired of waiting for bottom,” she said. “And with rumors of interest rates going up, people want to act now.”
An old limestone flour mill on the Mississippi riverfront near downtown Minneapolis that was supposed to be the site of East Bank Mills, an upscale housing development, is headed toward foreclosure and set to be sold at auction Nov. 15.
Just across the river, developer Jim Stanton has financing lined up to build a 150-unit condo project overlooking Gold Medal Park and is only awaiting city approvals.
The projects’ divergent paths reflect the conflicting nature of the downtown Minneapolis condo market. While condo sellers are offering huge discounts and sale prices are falling, supplies of new and existing condos are the lowest they’ve been in several years, leading some, such as Stanton, to believe that the time is right to build new units.
Mike Christenson, head of the Minneapolis Planning and Economic Development Department, said that in recent months he’s entertained a flurry of inquiries from prospective condo developers who are interested in various building sites, most of them along the Mississippi River corridor. He expects developers to initiate two or three new condo projects during the next year.
He notes that’s a shift from the current focus on building new rental units, a trend that’s being driven by a recent shift in attitudes toward homeownership. Hundreds of rental units are already under construction downtown.
Still some worry a fresh supply of new condos for sale could hurt the market. “There’s a fine line between being cautious and having optimistic foresight to gauge what’s coming next,” said real estate agent Cindy Froid, who focuses on downtown condos at Keller Williams Integrity.
Just five years ago buyers stood in line — some even waited overnight — to buy downtown condos. Sleek units were in short supply and high demand, particularly among empty nesters eager to drop their rakes and snow blowers off at the nearest Goodwill store. Developers responded by announcing plans to build thousands of new units, many of them along the gentrifying Mississippi riverfront, but within a couple of years the economy soured and the housing market collapsed, taking with it plans for hundreds of unbuilt condo units.
At the peak of the market in 2007 1,664 new units came on the market in downtown Minneapolis and in the neighborhoods just across the river. Last year there were 281 and this year there have been none, according Mary Bujold of Maxfield Research.
Total condo inventory, including resales, has fallen as well. In September there were 414 units on the market in downtown Minneapolis alone, down 40 percent from a September peak in 2006, according to the Regional Multiple Listing Service.
Bujold said that throughout downtown and in neighborhoods across the river there are 124 new unsold units in eight buildings, not including possibly 100 more that have been kept off the market and are now being rented.
Froid said that she’s cautious about the need for new units, not so much because of soft demand, but because of what another 150 units could do to the value of condos in surrounding projects.
In the central downtown district the median sale price of condos has fallen steadily since 2007 because of an increase in sales of inexpensive units, but also because sellers are offering steep discounts. So far this year the median sale price was $226,000, down 7 percent from 2009.
Bujold said some sale prices have been less than it cost to build them. Construction costs now average about $380 per square foot, she said. Some new projects, however, including Schafer Richardson’s Phoenix on the River, is selling for upward of $400 per square foot.
Fighting foreclosure
David Frank is all too familiar with the realities of the market. He’s the project manager for Schafer Richardson, the downtown property developer and management company that, besides Phoenix on the River, is behind East Bank Mills, which never got off the ground.
The ambitious plans, first proposed in 2004, were to transform 2.5 blocks on about 8 acres into a mixed-use development that would include 1,000 condos and apartments in several residential towers. But the project was delayed by a lengthy planning and approval process that included historic preservation groups who wanted the developer to maintain the integrity of the historic Pillsbury A Mill, which anchors the site. Shortly after buying the property Schafer Richardson started construction on another luxury high-rise building next door, and by the time the firm started marketing East Bank Mills the housing market already had started to collapse.
Schafer Richardson hopes to find a way to restructure its $19 million loan from Bismarck, N.D.-based BNC National Bank. Already the firm has repositioned certain elements of the project and is focused on finding a partner for the commercial part of the project. There’s plenty of demand to justify building rental housing on the site, but it’s difficult to get financing for such a project, Frank said.
And the firm is too committed to the project to let it slip away, he said. Frank said that he’s lined up several layers of public financing, including a grant from the Legacy Fund, and federal money that will be used to help clean up the site and to document and preserve the unique underground structures that helped power the mill. A TIF proposal is on the table, too, which could be worth millions of dollars.
Christenson said that he’s optimistic Schafer Richardson can save the project, and that the firm’s vision will eventually become reality. “We’re hopeful,” he said. “But there’s a lot that needs to be resolved to allow that to happen.”
Developers in training
Stanton, known for his renegade confidence, wants to be ahead of the competition when demand returns. Though he’s yet to finish selling about 60 remaining units at his latest project, Bridgewater, he’s already planning to build 150 units just down the street. He’s calling it Park Vista, a 12-story tower with a rooftop vegetable garden and other green features, with units that would sell for $250,000 to more than $1 million. And if he can work out a disagreement with the city about the number of parking stalls in the project, he’ll be ready to start construction in the spring.
Stanton blames much of the market’s problem on what he has dubbed “developers in training,” or DITs, who built undesirable condos that were difficult to sell.
“We’re aware of what the market is doing,” Stanton said. “But we had too many DITs in the market, and when we work our way through those bad projects the market will be stabilized.”
Press
February 20, 2009
The Washburn Lofts building was once an abandoned relic of the milling era, but today it is one of the most coveted condo buildings in the Minneapolis. With terra-cotta relief carvings and a massive water tower, the 10-story building towers over the vibrant Mill District along the Mississippi River. Barry Berg of Coldwell Banker Burnet has the most expensive listing. It’s a 3,200-square-foot one-bedroom unit that’s listed at $2.7 million and Jimmy Fogel, also of Coldwell Banker Burnet, has the least expensive listing. It’s a 2,750-square-foot two-bedroom unit that’s listed for $1.495 million. And after seven days on the market, Cindy Froid of Keller Williams Integrity Realty found a buyer for her listing: a 3,625-square-foot, three-bedroom unit with wall panels that slide and pivot to adjust for privacy. The list price was $2.449 million; the sale is pending.
Jim Buchta • 612-673-7376
October 10, 2010
One frigid November for home sales
JIM BUCHTA, Star Tribune
Luanne Lind is optimistic that, come spring, home buyers finally will get the hint that these are the best buying conditions in decades. But for now the Eden Prairie-based Remax Results agent says the market was nothing but challenging.
And numbers released Friday by the Minneapolis Area Association of Realtors confirm that assessment. Existing home sales dropped 39.1 percent in November compared with last year and dipped almost 4 percent from October. There was one bright spot — the market did slightly better last month than it did two years ago; closed sales during November were up 1.8 percent from 2008.
It’s not unusual for the November chill and holiday hubbub to put a damper on the late-winter housing market. Buyers are busy being festive, and house shopping isn’t as much fun when it’s cold. At the same time, sellers don’t want to be bothered by buyers, and many think it’s best to wait for the spring thaw. The situation is even more complicated this year. Credit is still tight. Economic uncertainty lingers. And buyers and sellers alike await signs that the market has turned.
That’s unlikely in the short term. On a seasonally adjusted basis, the sales pace in November stood at 35,200, down almost 40 percent from last year but up 13 percent from October.
Lind said there was little to motivate buyers. Though mortgage interest rates have risen in recent weeks, they’re still below 5 percent. And there are plenty of options for buyers. During November there were 24,620 listings on the market, 12.1 percent ahead of last year, but 11.2 percent behind 2008.
Many traditional sellers are waiting for better weather and a better market. Banks aren’t. Distress sales, including foreclosures and short sales, continue to flow into the market, putting downward pressure on prices. Due in part to those nontraditional listings, the number of new listings that hit the market during November was 3 percent higher than it was last year, but almost 5 percent lower than 2008.
And so far this year the number of new listings lags behind last year by almost 2 percent — a sign that sellers are waiting in the wings.
Lind said that she’s advising her clients not to wait to buy or sell. For buyers, waiting could mean competing with an increase in buyers in the spring. And for sellers it means more competition from other listings. She offered that same advice to Heather Cripps, who closed on the sale of her Bloomington house last month. She bought the house four years ago, but got married, was laid off from her job and knew that the house would have to go. Losing $52,000 was painful, but now that prices have fallen even further since she listed it earlier this year, she’s grateful that she heeded her agent’s advice and cut her losses.
“I was told, and I believe, that it isn’t going to get any better,” she said.
Condo activity grows
Holly Holt, a sales agent with Keller Williams Integrity Lakes who specializes in downtown condos, is seeing some positive signs. November was a particularly busy month for her. While traffic at open houses she’s hosted has been slow, the buyers who come through have been serious, Holt said. She’s working with several whom she met at those open houses who are intent on buying.
“Traffic at open houses used to be crazy,” Holt said. “But I think people were checking out the novelty of downtown living and thinking about it as a long-term goal. But now people are ready.”
At a recent open house, where she’s listed a 2,100-square-foot condo in the Zenith building for $649,900, she met a woman who listed her suburban house in 2008 and couldn’t sell it so took it off the market. Now she’s realizing that condo prices have come down, as well, and is ready to make the move.
Last month the median sale prices of closed transactions in the metro area fell 2.5 percent to $165,700 from November 2009. A slight uptick in sales of upper-bracket houses helped offset declines in sale prices on many bank-owned listings and other distress sales.
Holt, who said that a recent price cut on the Zenith condo has generated more interest, said her experience tells her that there’s lots of pent-up demand.
“I think some people are just tired of waiting for bottom,” she said. “And with rumors of interest rates going up, people want to act now.”
http://www.startribune.com/business/111703409.html
Developers returning to downtown condos
While downtown condominium prices remain depressed, some developers are getting ready to start building again.
By JIM BUCHTA, Star Tribune
Last update: October 16, 2010 – 9:28 PM
An old limestone flour mill on the Mississippi riverfront near downtown Minneapolis that was supposed to be the site of East Bank Mills, an upscale housing development, is headed toward foreclosure and set to be sold at auction Nov. 15.
Just across the river, developer Jim Stanton has financing lined up to build a 150-unit condo project overlooking Gold Medal Park and is only awaiting city approvals.
The projects’ divergent paths reflect the conflicting nature of the downtown Minneapolis condo market. While condo sellers are offering huge discounts and sale prices are falling, supplies of new and existing condos are the lowest they’ve been in several years, leading some, such as Stanton, to believe that the time is right to build new units.
Mike Christenson, head of the Minneapolis Planning and Economic Development Department, said that in recent months he’s entertained a flurry of inquiries from prospective condo developers who are interested in various building sites, most of them along the Mississippi River corridor. He expects developers to initiate two or three new condo projects during the next year.
He notes that’s a shift from the current focus on building new rental units, a trend that’s being driven by a recent shift in attitudes toward homeownership. Hundreds of rental units are already under construction downtown.
Still some worry a fresh supply of new condos for sale could hurt the market. “There’s a fine line between being cautious and having optimistic foresight to gauge what’s coming next,” said real estate agent Cindy Froid, who focuses on downtown condos at Keller Williams Integrity.
Just five years ago buyers stood in line — some even waited overnight — to buy downtown condos. Sleek units were in short supply and high demand, particularly among empty nesters eager to drop their rakes and snow blowers off at the nearest Goodwill store. Developers responded by announcing plans to build thousands of new units, many of them along the gentrifying Mississippi riverfront, but within a couple of years the economy soured and the housing market collapsed, taking with it plans for hundreds of unbuilt condo units.
At the peak of the market in 2007 1,664 new units came on the market in downtown Minneapolis and in the neighborhoods just across the river. Last year there were 281 and this year there have been none, according Mary Bujold of Maxfield Research.
Total condo inventory, including resales, has fallen as well. In September there were 414 units on the market in downtown Minneapolis alone, down 40 percent from a September peak in 2006, according to the Regional Multiple Listing Service.
Bujold said that throughout downtown and in neighborhoods across the river there are 124 new unsold units in eight buildings, not including possibly 100 more that have been kept off the market and are now being rented.
Froid said that she’s cautious about the need for new units, not so much because of soft demand, but because of what another 150 units could do to the value of condos in surrounding projects.
In the central downtown district the median sale price of condos has fallen steadily since 2007 because of an increase in sales of inexpensive units, but also because sellers are offering steep discounts. So far this year the median sale price was $226,000, down 7 percent from 2009.
Bujold said some sale prices have been less than it cost to build them. Construction costs now average about $380 per square foot, she said. Some new projects, however, including Schafer Richardson’s Phoenix on the River, is selling for upward of $400 per square foot.
Fighting foreclosure
David Frank is all too familiar with the realities of the market. He’s the project manager for Schafer Richardson, the downtown property developer and management company that, besides Phoenix on the River, is behind East Bank Mills, which never got off the ground.
The ambitious plans, first proposed in 2004, were to transform 2.5 blocks on about 8 acres into a mixed-use development that would include 1,000 condos and apartments in several residential towers. But the project was delayed by a lengthy planning and approval process that included historic preservation groups who wanted the developer to maintain the integrity of the historic Pillsbury A Mill, which anchors the site. Shortly after buying the property Schafer Richardson started construction on another luxury high-rise building next door, and by the time the firm started marketing East Bank Mills the housing market already had started to collapse.
Schafer Richardson hopes to find a way to restructure its $19 million loan from Bismarck, N.D.-based BNC National Bank. Already the firm has repositioned certain elements of the project and is focused on finding a partner for the commercial part of the project. There’s plenty of demand to justify building rental housing on the site, but it’s difficult to get financing for such a project, Frank said.
And the firm is too committed to the project to let it slip away, he said. Frank said that he’s lined up several layers of public financing, including a grant from the Legacy Fund, and federal money that will be used to help clean up the site and to document and preserve the unique underground structures that helped power the mill. A TIF proposal is on the table, too, which could be worth millions of dollars.
Christenson said that he’s optimistic Schafer Richardson can save the project, and that the firm’s vision will eventually become reality. “We’re hopeful,” he said. “But there’s a lot that needs to be resolved to allow that to happen.”
Developers in training
Stanton, known for his renegade confidence, wants to be ahead of the competition when demand returns. Though he’s yet to finish selling about 60 remaining units at his latest project, Bridgewater, he’s already planning to build 150 units just down the street. He’s calling it Park Vista, a 12-story tower with a rooftop vegetable garden and other green features, with units that would sell for $250,000 to more than $1 million. And if he can work out a disagreement with the city about the number of parking stalls in the project, he’ll be ready to start construction in the spring.
Stanton blames much of the market’s problem on what he has dubbed “developers in training,” or DITs, who built undesirable condos that were difficult to sell.
“We’re aware of what the market is doing,” Stanton said. “But we had too many DITs in the market, and when we work our way through those bad projects the market will be stabilized.”